We thought about asking insured for current tax return to see if they claimed income from court reporting but, of course, 2007 return would not yet be filed. Also, would it make a difference if insured claimed the cost of equipment as an expense or depreciated the equipment on previous tax returns?

Missouri Subscriber

You have an interesting situation. I've discovered that stenographers do buy their own equipment and it can run from a few hundred to a few thousand dollars. The insured could have held onto the equipment for sentimental purposes, or maybe to sell in the future on eBay. If a dance teacher has a drawer full of leotards and slippers, but is no longer teaching dance, the leotards are no longer business property. She doesn't have to get rid of them to prove she's become a nurse and won't go back to teaching; she may have saved the items for sentimental value, wear the leotards for gardening or just be a packrat.

Couch on Insurance 148:13 states: “A business property exclusion, however, does not apply to property merely because it once held that status, and the property will be covered if, at the time of the loss, it was no longer being used in a business.” Your concern that what's to prevent someone from stating they retired two days before the loss is valid. Her former employer should certainly be able to verify dates of employment and so could her new employer. Unfortunately, there's no way to guarantee that someone won't at some time in the future go back to a former profession; some things you have to take on faith as people can't accurately predict their future.